“Our horizontal diversification growth initiatives are underway and promise to deliver good results. The most exciting project is the super-high speed optic fibre network that we have started building over large parts of Johannesburg in the last six months. This will provide high capacity for our own use, thereby reducing our wholesale cost, whilst increasing revenue opportunities from corporate customers by offering cost-effective voice, data and media communications at maximum speeds. This service should be commercially available by March 2008,” Knott-Craig said.
Data traffic already contributes 10.5% to service revenue and has grown to sizeable R4 billion revenue per year business. “Including our interests in broadband suppliers like iBurst, Vodacom is arguably the biggest supplier of broadband in the country. By building our own infrastructure we will be able to significantly reduce data cost and hence prices to our customers in the medium to long term,” he said.
Knott-Craig said the Vodacom Earth Station at Midrand had been completed and would be commercially operational by December 2007. “This gives us direct satellite communications with our African operations. It also gives us alternate feeds for our South African infrastructure ensuring a more robust network.
“Our foray into pay TV looks promising, and the recent introduction of our own radio station for internal communication to our distribution channel and staff, and eventually to our customers by streaming, should also attract new advertising revenues. Media advertising using text and MMS has also been launched and we are hopeful that this too will produce an additional revenue stream. The soon-to-be introduced Vodacom instant messaging (IM) service will not only provide competition to players in this field, but will enhance our own product offering to the market.
“Our recent decision to diversify into managed services for corporate customers will include corporate hosting, enterprise application solutions, hosted PABX services, virtual private networks and managed storage, and should be available by the end of this financial year.
“We also are expanding our presence in the Internet space by becoming a Tier 1 ISP. This too should become a reality by the end of the current financial year,” Knott-Craig said.
“Our acquisitions into WBS Holdings and Wireless-G have strengthened our presence in the data communication space and given Vodacom access to not only WiMax services but also a significant number of WiFi Hotspots internationally. Commercial access to the WiMax network should be a reality by the end of the current financial year, as will integrated access to the WiFi Hotspots, “he said.
With customer growth in the Vodacom Group's other African operations continuing at rates of 40% – 57%, total customers for the group increased by 22.6% to 31.6 million. The maturing SA operation reported a 15.3% increase to 23.3 million customers with traffic increasing to 11 billion minutes and 2.2 billion SMSes during the past six months.
“After a clean-up of the inactive prepaid customer base, we now have a realistic industry total of approximately 42 million live SIM cards in South Africa, which is a telephone penetration of 87% of the population. We have put a supplementary ‘disconnection rule' in place to disconnect prepaid SIM cards if the only activity on the network for a period of 13 months is call forwarding to voicemail. This will result in a higher average revenue per user (ARPU) in our next set of results,” Knott-Craig said.
Meanwhile, Vodacom's Black Economic Empowerment (BEE) transaction, valued at R7.5 billion at the South Africa opco level, received the green light from shareholders last week, after being delayed over the last five months by shareholder activity.
